Equity Research INDIA

August 13, 2020

BSE Sensex: 38370
Consumer Staples & Discretionary
ICICI Securities Limited
is the author and
distributor of this report
Deep Dive #1: Waterproofing (long-term) opportunity
for paint companies
Sector update Deep Dive is our new series in which we will explore long-term category
opportunities. Our endeavor is to bring alive I-Sec Consumer team’s cumulative
experience of >100 years.
Waterproofing, a sunrise sector, offers healthy growth potential (~15% p.a.) over
2020-2030 (and beyond). Relative size of waterproofing vs. paints in India is 1:10
Asian Paints (ADD) (1:3 in developed markets), whereas both are near-necessities. Pidilite and Asian
TP: Rs1,900 Paints enjoy market leadership with moats of (1) prescription route of plumbers to
leverage their consumer relationships, (2) complementary products with paints
Berger Paints (HOLD)
such as putty/primer with waterproofing properties and basecoats to be used prior
TP: Rs510
to paints, (3) large portfolio of problem solution products, (4) strong brand equity
Kansai (HOLD) (important in a ‘problem solution’ / functional category) and (5) distribution
TP: Rs460 network. We believe Akzo Nobel has technological superiority and hence it’s a
long-term winner. While there are no pure-plays in waterproofing, we recommend
Akzo Nobel(BUY) exposure via paint companies and Pidilite. Top picks: Asian Paints (ADD) and
TP: Rs2,350 Akzo Nobel (a long-gestation turnaround; BUY).
 Key players in waterproofing market: Waterproofing market is ~Rs60bn and is
Pidilite Ind (HOLD)
TP: Rs1,330 growing at ~15% per annum. Major organized players (market share) are Pidilite
(46%), Asian Paints (23%) and Berger (12%). Players such as Akzo, Kansai Nerolac
Astral Poly (ADD) and Astral Poly have recently entered the market.
TP: Rs1,007  Sub-segments of waterproofing market: There are seven sub-segments of
waterproofing market in India as (1) Roof, (2) External, (3) Interior, (4) Structure, (5)
Bathroom, (6) Water tank and (7) Below ground waterproofing. We note the Roof,
External, Internal and Structure segments account 80% share of the market. The
revenue share of new construction and repair segments is 25:75.
 Geographical revenue mix and seasonality: The industry is stronger in South and
West India due to higher rainfall and possibility of damage to the buildings. The East
and North regions account for just ~40% of the market. Considering the strong brand
equity and established distribution in South India, Asian Paints has strong right to win
whereas Kansai (50% revenues in North) has relatively limited potential. While there
is structural growth potential in waterproofing industry, we believe its annual volatility
Research Analysts: may be high due to impact of monsoon (prolonged / delayed or excessive / scant).
Manoj Menon  Prescription route is important: Being a ‘problem solution’ category, the consumer
manoj.menon@icicisecurities.com promotions are of limited utility in this category. Market leader Pidilite has started
+91 22 6637 7209
Dr.Fixit academy to educate the plumbers about waterproofing problems as well as
Aniruddha Joshi
aniruddha.joshi@icicisecurities.com solutions. In turn Pidilite benefits from the relationships of these certified plumbers
+91 22 6637 7249 with the consumers. In order to win trust of the consumers, Paint companies offer
Nehal Shah warranty upto 10 years on their waterproofing products.
nehal.shah@icicisecurities.com
+91 22 6637 7235  Logical extension to paints: Paint companies are leveraging the logical extension
Vismaya Agarwal, CFA of waterproofing to promote paints and offer better value to consumers. They have
vismaya.agarwal@icicisecurities.com introduced (1) putty with waterproofing properties, (2) Primer with waterproofing
+91 22 2277 7632
Karan Bhuwania benefits, (3) crack fillers with waterproofing properties. We also note paint companies
karan.bhuwania@icicisecurities.com have launched base coats with waterproofing benefits to be used with exterior paints.
+91 22 6637 7351
 Stock Calls: Waterproofing market offers healthy growth (~15%) as well as healthy
Jigar Shah
jigar.shah@icicisecurities.com margins/return ratios. Though there are no pure-play listed companies in
+91 22 6637 7416 waterproofing segment, investors can get exposure through Asian Paints, Akzo
Nobel and Pidilite.
Please refer to important disclosures at the end of this report
 Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Analysing the waterproofing market in India

The waterproofing/construction chemicals market is a sunrise sector in India with an
estimated market size of ~Rs60bn and is growing at CAGR of 15-20%. Apart from
steady expansion of the market, we expect value migration from unorganised to
organised sector.

Key players and market shares

The waterproofing market is dominated by Pidilite with market share of ~46%. Asian
Paints (23%) and Berger Paints (12%) are other major players. Akzo Nobel, Kansai
Nerolac and Astral Poly are recent entrants in the waterproofing/construction
chemicals market. There are global players such as Fosroc, SIKA, BASF but these
players largely operate in B2B markets.

Chart 1: Market shares in waterproofing market

Others
18%

Akzo
1%
Pidilite
Berger 46%
12%

Asian Paints
23%

Source: Company data, I-Sec research

Major segments of waterproofing market

The waterproofing market is divided in seven sub-segments:

Chart 2: Sub-segments of waterproofing market

Water proofing

Roof water External water Internal water Structure Bathroom Water tank Below ground
proofing proofing proofing water proofing water proofing water proofing water proofing

Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities
Breakup of waterproofing market
The waterproofing market is divided into seven sub-segments. External waterproofing
and roof waterproofing are the largest segments whereas bathroom waterproofing and
below-ground waterproofing segments are smallest. We also note external
waterproofing is growing faster than rest of the market on the back of aggressive
investments by paint companies.

Chart 3: Indicative breakup of waterproofing market

Bathroom,
Watertank &
Below Ground
20%

Roof & Structure

50%

External & Internal

30%

Source: Company data, I-Sec research

Presence of key companies across sub-segments

Pidilite is present in most sub-segments of the waterproofing market. Following shows
the presence of key players:

Table 1: Presence of key companies across waterproofing sub-segments

Pidilite Asian Paints Berger Akzo Kansai Astral
Roof Y Y Y N N Y
External Y Y Y Y Y Y
Internal Y Y Y Y Y N
Structure Y Y Y N N Y
Bathroom Y Y Y N N Y
Water tank Y Y Y N N Y
Below ground Y N N N N Y
Source: Company data, I-Sec research

‘Paint + waterproofing’ strategy of paint companies

We believe waterproofing is a logical extension for paint companies as consumers
usually do waterproofing work while painting their houses. Companies such as Asian
Paints and Akzo Nobel offer waterproofing products to be used while painting houses.
Paint companies have also launched basecoats with waterproofing abilities to be used
before painting. Berger has introduced putty and primer with waterproofing properties.

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities
Chart 4: Waterproofing basecoat + exterior paint combination by Akzo Nobel

Source: Company data, I-Sec research

Geographical revenue breakup of waterproofing segment

Coastal areas face more problems of water leakage (higher moisture in air and higher
rainfall), hence require higher investments in waterproofing. We note dry regions with
relatively lower rainfall such as North India have comparatively lower need of
waterproofing products.

As West and South regions account for higher revenue share of waterproofing
segment, we expect Asian Paints (strong brand equity + distribution in South India) to
be a major beneficiary. We believe Kansai, which generates higher revenues from
North India (revenue share of 50%), has relatively lower growth potential in
waterproofing segment.

Chart 5: Geographical revenue breakup of waterproofing market

East
20%
South
30%

West
30%
North
20%

Source: Company data, I-Sec research

High-seasonality industry
The waterproofing industry generates highest revenues in April-June quarter, i.e. just
before beginning of monsoon. July-September quarter is smallest due to monsoon.
Delay in monsoon or prolonged monsoon would have short-term impact.

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities
Chart 6: High-seasonality industry (quarter-wise revenue breakup)

Mar
25%

Jun
40%

Dec
20%

Sept
15%

Source: Company data, I-Sec research

‘Problem solution’ category and market creation opportunities

Our channel checks indicate the trade margin in waterproofing is ~5% (similar to
paints). However, we note there are negligible promotions in waterproofing. Being a
‘problem-solution category’, there are negligible consumer promotions.

However, companies push their waterproofing products through the prescription route,
i.e. plumber channel. Pidilite (Dr. Fixit) has started Dr. Fixit academy, which certifies
the participating plumbers. It gives them recognition in front of customers. Pidilite can
leverage the influence of plumbers on customers to showcase its products.

Other players offer warranty up to 10 years on their waterproofing products.

Table 2: Trade margins, promotions and market-creation opportunities

Consumer promotion spends
Trade margins
Promotions
Prescription route
Promise to consumers
Source: Company data, I-Sec research
Particulars
5% + Trade schemes
Negligible considering 'problem solution’ category
Dr. Fixit academy by Pidilite – Leveraging plumber influence by giving
certification to plumbers
10-year warranty

Key raw materials used in waterproofing products

The major raw materials used in waterproofing industry are crude oil as well as crude
oil derivatives such as bitumen. We do not expect any material cost pressure in the
short term on waterproofing industry given lower crude oil prices and strong pricing
power of the incumbent players.

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities
Chart 7: Crude oil Chart 8: HDPE (packaging material)

Crude (USD / barrel) HPDE (Rs /kg)

90 140
80 120
70
100
60
50 80
40 60
30
40
20
10 20

0 0

Jul-18
Jul-18

Jun-19

Jan-20
Sep-17

Dec-17

Nov-18

Dec-17

Nov-18

Jun-19

Jan-20
Feb-17

Apr-18

Feb-19

Oct-19

Sep-17

Apr-18

Oct-19
May-17

May-20

Feb-17

May-17

Feb-19

May-20
Company data, Bloomberg, I-Sec research

Revenue breakup of companies in waterproofing market

While there are many players in the waterproofing segment, we note there are six
major companies. These companies have diversified organically / inorganically into
waterproofing as logical extension to their existing business.

Table 3: Revenue share of companies from waterproofing segment (FY20)

Company Revenue share (%)
Pidilite ~20%
Asian Paints ~6%
Berger ~6%
Akzo <2%
Kansai <2%
Astral Poly <2%
Source: Company data, I-Sec research

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 Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Asian Paints
Asian Paints is no.2 player in waterproofing market with its SmartCare brand and
market share of ~23%. SmartCare waterproofing range targets most sub-segments
such as interior, bathroom, exterior and roof waterproofing. It has launched products
for new construction as well as repairs.

Asian Paints has introduced differentiated products such as primer with

waterproofing, putty/crack filling material with water-proofing properties.

Table 4: SmartCare waterproofing product portfolio

Product
SmartCare Bathroom
waterproofing
SmartCare APP membranes
SmartCare Damp Block 2K
SmartCare EPDM Membrane
SmartCare Fabseal
SmartCare Multipurpose
polymer
SmartCare SBS Membrane
SmartCare Textured Crack
Filler
SmartCare AkrylMax
SmartCare Crack Seal
SmartCare Crackshield
SmartCare Damp Block
SmartCare Unyverseal
SmartCare Vitalia
SmartCare Damp Proof
SmartCare Hybrid PU Sealant
SmartCare Joint Tapes
SmartCare Instant Leak Stop
SmartCare Damp Sheath
Interior
Source: Company data, I-Sec research
Particulars
Waterproofing membrane triple layered laminated film
Waterproofing membrane modified glass fibre sheet reinforced bituminous membrane
Two-component acrylic polymer-modified cementitious high performance coating
SmartCare EPDM membrane is a preformed elastomeric waterproofing membrane made up of high quality
EPDM rubber
Fast curing multi-purpose sealing, patching and mending compound that can be used in both wet and dry
conditions
High performance acrylic emulsion based binder
Waterproofing membrane is an SBS-modified polyester sheet reinforced bituminous membrane
Single component, acrylic crack filler with a grainy texture
Acrylic emulsion based plastic elastic sealant for sealing masonry joints
Ready to use fibre glass reinforced crack filling compound for both interior and exterior surfaces
Glass fibre based product used to hide spider web like cracks on interior walls
Polymer modified, flexible cementatious waterproof coating
Durable and odorless neutral silicone sealant for sealing of glass, masonry and sanitary joints
Integral liquid waterproofing compound with advanced formulation and superior plasticizing additives for
cement concrete, mortar and plasters
Fibre reinforced elastomeric liquid applied water proofing membrane
Single component, moisture curing, low modulus silyl terminated polyurethane sealant for sealing of
dynamic joints and cracks in interiors and exteriors
Waterproofing of all ‘L’ shaped construction joints in buildings and residential areas
Instant waterproofing solution.
Waterproofing primer which prevents moisture from showing on interior painted surfaces

Chart 9: SmartCare waterproofing product portfolio

Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Kansai Nerolac
Kansai Nerolac is a recent entrant in the waterproofing market. While it did have some
products catering to the segment, its major step was to acquire Gujarat-based Perma
Construction Aids Pvt Ltd (Perma), a waterproofing product company for a
consideration of Rs291mn in Apr’19. Perma’s portfolio comprises of waterproofing,
adhesives, epoxy, admixtures etc.

Organically, Kansai Nerolac has launched waterproofing products as part of its

exterior paints portfolio.

We believe waterproofing products account for less than 2% Kansai Nerolac’s

revenues.

Chart 10: Products of Kansai Nerolac in waterproofing segment

Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Akzo Nobel
Akzo Nobel has ~1% market share in the waterproofing market. It entered the market
in FY19 with the brand Dulux Aqua Tech. Apart from waterproofing products; the
company has also introduced waterproof coats as part of its exterior paints portfolio.
While the waterproofing products of other companies focus on water resistance,
Akzo’s products focus on waterproofing and are considered technologically superior.

Table 5: Products of Akzo Nobel in waterproofing segment

Product
Dulux Aquatech Flexible
Water proof Basecoat
Dulux Aquatech waterblock
2K
Dulux Aquatech Water proof
Basecoat
Dulux Aquatech range of
crack fillers
Source: Company data, I-Sec research
Particulars
Premium waterproof coating with revolutionary Hydroshield technology
bridges cracks and covers the porous wall surface with a thick protective film
Acrylic cementitious & flexible high-performance waterproofing coating
Waterproof coating with revolutionary Hydroshield technology bridges cracks
and covers the porous wall surface with a thick protective film
Solutions for every type of exterior interior cracks

Chart 11: Products of Akzo Nobel in waterproofing segment

Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Berger Paints
Berger Paints has ~12% market share in the waterproofing segment. It entered the
business with the brand Home Shield and has launched products across key sub-
segments of water proofing.

Berger has also acquired 95.53% stake in STP Limited, a waterproofing product
company in H1FY20, for a consideration of Rs1.6bn.

Table 6: Products of Berger in waterproofing segment

Product Particulars
Wallshield 2K Prevents moisture passing through gaps in walls
Polymer modified cement-based product which forms strong flexible waterproof coating over
Dampstop the substrate
Latex shield 2K Protective elastomeric layer over the surface and thus prevents water infiltration.
Polymer modified cementitious waterproof slurry mortar consisting of a liquid polymer and a
Tankshield PW cement-based mix
Waterproof Putty Putty with waterproofing technology
Seal O Prime Sealer and an undercoat with excellent hiding property
Emulsion with silicon additives – transparent film forming water-based paint for exterior
Illusion sealer surfaces
Latex plus Latex-based liquid for waterproofing & multi-purpose repair work.
Advanced Latex Styrene-Butadiene latex-based liquid for high performance waterproofing and multi-purpose
plus repair work
Cementmix plus Improves integral waterproofing properties of cement concrete
Crack Fill paste Ready to use flexible putty for filling cracks in plastered surfaces.
Crack fill powder Cement-based polymer modified material used for filling cracks on plaster surfaces
Liquid waterproofing compound that forms a highly elastic and UV resistant membrane on
PU Roofkoat cementitious surfaces.
Weathercoat Acrylic polymer along with reinforcing fibres, which forms a white coloured membrane-like
Roofguard waterproof coating over the applied surface
Weathercoat
Kool & Seal Water-based, flexible, waterproof roof/terrace/parapet coating
High-performance preformed water proofing membrane made of distilled bitumen modified
Proshield P/H/F with Atactic Polypropylene (APP)
Source: Company data, I-Sec research

Chart 12: Products of Berger in waterproofing segment

Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Pidilite
In Pidilite Industries, construction and paint chemical segment (which includes
waterproofing products & construction chemicals) contributes ~20% of standalone
revenues. Over the last 5/10/15 years, this segment has grown at CAGRs of
~11%/14%/20% at the consolidated level.

Pidilite sells waterproofing products under brand name Dr. Fixit and it has a domestic
subsidiary Nina Percept, which provides waterproofing services and solutions to
projects. Company has categorised Dr. Fixit and Nina Percept brands under the
growth category. Pidilite has set a target to grow 2-4x GDP in the growth categories,
which include brands such as Dr. Fixit, Roff and Nina Percept. While Dr. Fixit is
predominantly a retail brand, Nina Percept is present in the B2B segment. Hence, over
the last year, growth of Nina Percept has taken a beating due to slowdown in real
estate and higher competition.

Chart 13: Pidilite’s construction chemicals annual Chart 14: Nina Percept (subsidiary) quarterly
revenue trend revenue trend

Construction/Paint Chemicals revenue (Rs mn) Nina Percept quarterly sales (Rs mn)
16,000 900
14,000 800
700
12,000
600
10,000 500
8,000 400
300
6,000
200
4,000 100
2,000 0
Q4FY16

Q1FY20
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19

Q2FY20
Q3FY20
Q4FY20
-
FY02

FY05

FY08
FY01

FY03
FY04

FY06
FY07

FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19

Source: Company data, Bloomberg, I-Sec research

Marketing initiatives for Dr. Fixit

 Pidilite launched new product called DR. FIXIT LW+: A new television
commercial featuring Mr. Amitabh Bachchan was aired to communicate that one
litre of Dr. Fixit LW+ needs to be mixed in every five bags of cement while
constructing a new home.
 Dr. Fixit continues to leverage digital media for educating home owners about the
right waterproofing. Apart from regular avenues such as search and social Media,
Dr. Fixit uses innovative ways to reach out to sharply targeted people building their
homes, using mobile platforms such as InMobi and Truecaller.
 Dr. Fixit launched Skilled Waterproofer, a uniquely designed programme, for
specialised set of skilled waterproofers. Selected on the basis of their experience
and workmanship, these waterproofers are provided with business training and
tools that help them deliver a distinctive and professional waterproofing experience
to consumers.

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities
Chart 15: Top variants of Pidilite

Source: Company data, I-Sec research

Chart 16: Differentiation in branding

Source: Company data, I-Sec research

Table 7: Acquisitions in construction chemicals segment by Pidilite over the years:

Company/ Year Category Country Acquisition details
Brand
Nina FY15 Waterproofing India Nina is engaged in the business of supply and installation of waterproofing systems,
Waterproofing systems including waterproofing products or thermal insulation systems for construction
Systems projects and infrastructure projects. Pidilite acquired 70% stake in the company.
Hybrid Coating FY13 Construction USA Pidilite entered into a JV with Hybrid Coating Technologies Inc. for manufacture of
Technologies chemicals construction chemicals. Hybrid Coating Technologies offers coatings and paints for
industrial and commercial customers around the world. It has the exclusive license of
patent-protected polyurethane-based coatings and paint products
Pagel FY07 Construction India Acquired 75% equity stake in Pagel, at a cost of Rs6.4mn and loan contribution of
Concrete chemicals Rs3.5mn. Pagel is an Indian company with technical and financial collaboration with
Technologies PAGEL SPEZIAL-BETON GMBH and is engaged in the business of grouts and
special mortars
Bamco FY06 Construction Thailand Bamco, with a turnover of Rs86mn in 2005, is a manufacturer of speciality bitumen-
chemicals based waterproofing products and had marketed its products in Thailand, Indonesia,
Malaysia and Singapore.
Chemson Asia FY05 Construction Singapore Chemson Asia is a Singapore-based manufacturer of waterproofing products and
chemicals exterior parts. With a manufacturing base in China and distributors in Indonesia and
Thailand, Chemson markets its products throughout these three countries in addition
to Malaysia and Singapore, thus helping Pidilite to expand its network in Asia-Pacific.
Roff FY05 Construction India Acquired Roff, a leading construction chemicals brand in India, for Rs138mn, enabling
chemicals Pidilite to gain access to Roff’s large product range along with its distribution network
and manufacturing facilities.
M-Seal & Mr. FY00 Sealants India Epoxy sealant brands acquired from Mahindra Engineering & Chemical Products Ltd
Fixit (MECP), a subsidiary of M&M. Later in 2001, Pidilite launched Dr. Fixit range of
construction chemicals.
Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Astral Poly
Astral Poly Technik (ASTRA), in last one and half years, introduced a full range of
waterproofing products under its brand Trubuild. Adhesives and construction
chemicals contributed 22.6% of overall revenues for ASTRA in FY20 at Rs25.8bn.
Although the company was involved in the adhesive segment in a small way, post
acquisitions of Resinova and Seal IT in FY15 it entered most segments of adhesives
and construction chemicals. After stabilising both the companies and their products in
the market, ASTRA’s product portfolio comprised a full range of waterproofing and
construction chemical products in last 1-2 years.

Trubuild offers various construction chemicals that make the protection of building
effortless and effective.

Table 8: Key product portfolio of Astral

Product Particulars
Integral waterproofing compound specially designed for giving waterproofing to
Trubuild CPS cement concrete, mortars and plasters
An acrylic co-polymer emulsion used as a bonding agent for new substrate to old
substrates, and as a cement mortar modifier that gives an excellent bond to old and
Trubuild BWP new concrete
A ready-to-use styrene butadiene latex. It is used for repairing of old constructions like
Trubuild WPL floor, beams slabs, etc. and waterproofing of toilets, kitchen, bathroom and terraces
A single component water ‘dilute-able’ protective coating to be applied over exterior
Trubuild WPC surface of walls to prevent entry of water and moisture through the surface
Non-flammable water soluble solution designed to incorporate water repellency to
Trubuild WRP varied surfaces like sandstone, marble, concrete, exposed bricks and terracotta tiles
A single component water thinnable polymeric liquid for sealing porosity of sandstone,
Trubuild WTS concrete and other porous surfaces
Polymeric cement-based tile grout specially designed to create non-shrink, waterproof
Trubuild Tile Grout tile joints
Blend of Portland cements, quality graded aggregate and chemical modifiers, which
provide a waterproof coating for use below and above ground for cellars, retaining
Trubuild Tanking slurry walls, and tanks
A single component cementitious ready-to-use fast-setting mortar for plugging water
Trubuild ILP651 leakages

Chart 17: Top variants

Source: Company data, I-Sec research

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Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities

Valuation summary – Companies in waterproofing segment

The waterproofing segment offers healthy growth of ~15% per annum with profitability
and return ratios of >20%. While there are no listed pure-play companies in the
segment, we believe investors can play the theme through Pidilite Industries and/or
paint companies.

Table 9: Key financials of companies in waterproofing segment

CMP TP Upside PE (x) EV/EBITDA (x) ADTV Market Cap
Company (Rs) (Rs) (%) Rating FY21E FY22E FY21E FY22E (US$ mn) (Rs bn) (US$ bn)
Akzo Nobel 2,000 2,350 18 BUY 43 34 28 22 0.5 84 1.1
Asian Paints 1,797 1,900 6 ADD 64 51 40 33 64.4 1,624 21.3
Astral Poly 1,070 1,007 (6) ADD 60 43 37 28 1.5 162 2.2
Berger Paints 550 510 (7) HOLD 93 75 56 47 10.4 492 6.5
Kansai Nerolac 483 460 (5) HOLD 56 43 34 27 1.7 246 3.2
Pidilite 1,365 1,330 (3) HOLD 74 51 52 37 18.2 698 9.7

EV/ sales (x) P/B (x) P/CEPS (x) RoE (%) RoCE (%) CAGR (FY20-22E) (%)
Company FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E Revenues EBITDA PAT
Akzo Nobel 3.8 3.1 7 6 32 26 16 18 16 18 1 1 5
Asian Paints 8.4 6.8 15 13 49 40 25 28 22 25 12 12 12
Astral Poly 6.5 5.3 10 8 43 32 17 21 19 25 9 14 24
Berger Paints 9.4 7.9 18 16 69 57 20 22 17 19 4 4 4
Kansai Nerolac 5.6 4.4 6 6 42 33 12 14 11 14 5 10 9
Pidilite 11.3 9.0 14 12 61 45 19 25 25 32 2 9 10
Source: Company, I-Sec research

Price chats
Akzo Nobel Asian Paints Astral Poly
2,700 2,000 1300
2,500 1,800
2,300 1100
1,600
2,100 1,400 900
(Rs)

(Rs)

(Rs.)
1,900 1,200
1,700 700
1,000
1,500 500
800
1,300
600 300
Aug-18

Aug-19
Aug-17

Aug-20
Feb-19

Feb-20
Feb-18

Aug-17

Aug-18
Feb-19
Aug-19

Aug-20
Feb-18

Feb-20

Aug-18

Aug-20
Aug-17

Aug-19
Feb-18

Feb-19

Feb-20
Berger Paints Kansai Nerolac Pidilite
700 600 1,800
600 550
1,600
500 500
450 1,400
400
(Rs)

(Rs)

(Rs)

400 1,200
300
350 1,000
200 300
800
100 250
600
Aug-19
Aug-17

Aug-18

Aug-20
Feb-18

Feb-19

Feb-20

Aug-17
Feb-18

Aug-19
Aug-18

Aug-20
Feb-19

Feb-20

Aug-17
Feb-18
Aug-18
Feb-19
Aug-19
Feb-20
Aug-20

Source: Bloomberg

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 Consumer Staples & Discretionary sector, August 13, 2020 ICICI Securities
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New I-Sec investment ratings (all ratings based on absolute return; All ratings and target price refers to 12-month performance horizon, unless mentioned otherwise)
BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return

ANALYST CERTIFICATION
I/We, Manoj Menon, MBA, CMA; Aniruddha Joshi, CA, Nehal Shah, CA; Vismaya Agarwal, CFA, B. Tech, PGDM; Karan Bhuwania, MBA; Jigar Shah, CA; authors and
the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or
securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Analysts are not registered as research analysts by FINRA and are not associated persons of the ICICI Securities Inc. It is also confirmed that above mentioned
Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer,
director or employee of the companies mentioned in the report.
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information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.

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